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House lease via project company or girlfriend


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I have read up a lot before asking these questions, as there are still some big doubts in my mind :

 

There are a few projects in Hua Hin that (Falcon, Phu Thara, Aria and more) that sell houses via a lease contract of 30 years. The land is transferred to a Thai holding company and you lease from that company. The chanote will get the lease on the back and all is set. In an addendum the lease contract gives the option to extend after 30 years, to sell whenever you want to a Thai with transfer of the chanote or to a foreigner with a new 30 year lease. You can also renew the lease early if you like.

 

These addendums however is what i worry about, does anyone have any past experience with this sort of setup or is it too new to have any experience with ?

I worry about the holding company coming into new hands after a while and all the promises disappearing and you can't sell anymore just sit out the lease and lose the lot after the 30 years or even before if you pass away.

 

The second possibility is to trust my girlfriend with the chanote and lease/usefruct via her. The company option seems more safe. I know renting is more safe by far but the rents of the houses here are around 40.000 and to buy is only 6.5 to 7MB

Thanks for any ideas / thoughts 

 

Edit : some clarification ; The thai holding company is owned by the project, also 100% Thai and fully legal. 

 

  

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32 minutes ago, WhatsNext said:

The second possibility is to trust my girlfriend with the chanote and lease/usefruct via her.

Or have her get a mortgage which you pay the repayments...then she has an incentive to be nice and if you do break up you just walk away..then go rent somewhere else.

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No way of owning land in Thailand...all these weird and wonderful exotic get me rounds are geared towards the Thais, you own and have control of sweet FA...rent that's it...or buy a nice condo in your name.

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All these constructs are risky and a Thai GF has showed to be the most dangerous one, if she is not from a wealthy family. As owner of a Thai residence permit you may obtain a special permit to buy up to 1 rai. Best option is get Thai natinality as I did.

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4 hours ago, male expat said:

Best option is get Thai natinality as I did.

Yes that would be nice but takes about 14 years and requires work and taxes which I don't participate in..

 

The project companies seem safe but yes I agree with the posters here, there is no real guarantee apart from the first 30 years. My biggest worry is not being able to sell when I want to if there is anything fishy with the management of the Thai project company. All will be well the first say 5 years, but what after 10 or 15

 

7mb over 30 years is fine, but being forced to rent out and not get your money back (partly) with a sale is what made me ask here

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14 hours ago, WhatsNext said:

I know renting is more safe by far but the rents of the houses here are around 40.000 and to buy is only 6.5 to 7MB

 

Rent for 40K, and put the other 6.46-6.96M into interest bearing securities.  Then quit worrying about all the things you need to worry about related to Thai real estate.  Like that boom-box bar that will be opening up next door, the dodgy management company that screws you, the 14 Chinese neighbors who rent out their villas to buses full of partiers, the GF that's only in it until she can get the house away from you, etc.

 

Then, in 5 or 10 years when you get the lay of the land, you can make a better decision.

 

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1 hour ago, Pravda said:

There is no way that 6.5m house rents for 40,000 a month. 

Well i live in a 8 million house at the moment for 40.000 a month, this includes internet, pool maintenance, garden maintenance and project costs. The rent without those costs is around 33.000. This is on the low side of things in Hua Hin for a pool villa. The 6.5 is the same house, without furniture and a little less land. 

 

If you live in Pattaya i understand your remark, the situation there is different but there are no new pools villas for that price to be found. 

 

Quote

6.46-6.96M into interest bearing securities

Yeah i would like that, sadly the interest in the major currencies is zero or below zero as its in my case with the Euro. One of the reasons i wanted to buy a house, as the money in the bank is dead capital.

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On 8/10/2020 at 5:16 PM, WhatsNext said:

In an addendum the lease contract gives the option to extend after 30 years, to sell whenever you want to a Thai with transfer of the chanote or to a foreigner with a new 30 year lease. You can also renew the lease early if you like.

It is not 100% enforceable by Thai law.

 

You better to buy land on Thai company name, it would be more safe but also have to be careful because if you use this company only for own the land it could bring up the questions. 

 

 

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Thanks for the answers so far, i know its not a smart idea. The situation in Hua Hin makes the lease look normal as so many foreigners have done that already or are doing it. The Covid crisis makes the houses cheaper, the baht is down a bit to the Euro and it all seems like a great plan for some weird reason till you find that you need the signature of the thai project company if you ever want to sell again...

 

Lease property should be 50% of the own price, but sadly its the same.

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15 hours ago, WhatsNext said:

Well i live in a 8 million house at the moment for 40.000 a month, this includes internet, pool maintenance, garden maintenance and project costs. The rent without those costs is around 33.000. This is on the low side of things in Hua Hin for a pool villa. The 6.5 is the same house, without furniture and a little less land. 

 

If you live in Pattaya i understand your remark, the situation there is different but there are no new pools villas for that price to be found. 

 

Yeah i would like that, sadly the interest in the major currencies is zero or below zero as its in my case with the Euro. One of the reasons i wanted to buy a house, as the money in the bank is dead capital.

Project cost is a part of your rent? What a laugh.

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If you put it in your girlfriend's name you might as well give her 6.5m baht. A company is expensive to run and you only own 49% of the company. However up to 49% of condos in a block can be legally owned by a foreigner. 6.5m at the moment will buy a decent condo at auction from distressed property auctions. Technically nominee shareholders are breaking the law and so are you by allowing nominees in your company. 

 

Take a lawyers advice but I suggest that if you put it in a Thai name you take a Usurfract to live in the house and a mortgage on the land so the land can't be sold without paying you off first.

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Usufruct with Thai wife works but virtually impossible to sell on so you are kissing goodbye to the majority of purchase price as landowner will want most of the sale on price when that happens. Minor point but land tax has to be paid on usufructs

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On 8/10/2020 at 12:16 PM, WhatsNext said:

The chanote will get the lease on the back and all is set. In an addendum the lease contract gives the option to extend after 30 years, to sell whenever you want to a Thai with transfer of the chanote or to a foreigner with a new 30 year lease. You can also renew the lease early if you like.

A lease can run for up to 30 years, any additional 30-year lease in the contract is illegal, and the lease cannot exceed 30 years from first lease-date.

 

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The term of the lease agreement cannot exceed 30 years

The term of a real estate lease in Thailand may be fixed or periodic. The maximum lease term in Thailand is 30 years (section 540). Any lease of immovable property for a longer period than 30 years in Thailand may only be made by renewal of the lease contract upon its expiration. Based on supreme court judgments it is possible to say that a valid and enforceable renewal can only be made within a period of 3 years prior to the expiration of the first lease term (not 30 years prior to expiration). If for example the lessor and lessee have executed 2 or more consecutive 30-year lease agreements it shall by law be deemed as 1 lease and reduced to 30 years.

Source: SamuiForSale "Thai Real Estate Lease Leasehold and Rent laws".

 

As a hand rule count a lease for 30 years only. If you compare to rent, you might have paid more during the same period for renting a similar property than when leasing land for 30 years and building a home, which you use for 30 years; or buy a home including a land lease.

 

You might however be able to negotiate a new lease at a fair fee.

 

If you have a separate agreement for a 30 years lease some time out in the future, 30 years from now, it might not be legally binding at all, if being considered part of the original lease agreement; and it might not be binding for a new owner of a land holding company. It might be a civil court case against the one that originally signed the agreement.

 

On 8/10/2020 at 12:16 PM, WhatsNext said:

The second possibility is to trust my girlfriend with the chanote and lease/usefruct via her.

There is the old saying "never invest more in Thailand than you can afford to loose". It's always worth having that in mind. A usufruct run for an agreed period, or your life. Another option is a superficies combined with a lease, however lease will have same legal limitations as above, apart from being with a girlfriend/spouse.

 

Always make contracts with a spouse before marriage, as contracts made during a marriage has a risk of being declared void in case of divorce.

 

I personally prefers – looked from a worst case scenario – to be worth more alive than dead in Thailand, just in case of something you never know, nor would think ever possible...:whistling:

 

On 8/10/2020 at 12:16 PM, WhatsNext said:

The company option seems more safe. I know renting is more safe by far but the rents of the houses here are around 40.000 and to buy is only 6.5 to 7MB

The company option with an empty shell company with Thai nominee shareholders is illegal, however often used one-or-other way. In theory you can never own more than 49 percent of the company, but might be able to control a majority of votes, by using a method with preferred shares.

 

The running costs of an empty shell company could be up to 40,000 baht a year; i.e. in 30-years up to 1,2 million baht (+ inflation).

 

The benefit using a company – apart from re-negotiation of a lease with third party, or the risk of a spouse as owner – is that if reselling the property to a foreigner, you sell the stocks in the company, and is not transferring the property; so no property tax and transfer fees are involved.

 

However, if reselling the property to a Thai, they might not at all be interested in a company, so the company will sell the property, pay taxes, and you will need to close the company.

 

Money is of course relative, but a 6.5 million baht house compared to summed company costs might not make sense, compared to the risk with a 30-year lease agreement, or an agreement with girlfriend/spouse.

 

40,000 baht monthly rent x 12 x 30 = 14.4 million baht, so compared to renting, any long-term "owner" kind of solution makes sense.

 

If you after all considers the company limited method, you might have additional questions.

🙂

 

 

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13 minutes ago, khunPer said:

A lease can run for up to 30 years, any additional 30-year lease in the contract is illegal, and the lease cannot exceed 30 years from first lease-date.

 

Source: SamuiForSale "Thai Real Estate Lease Leasehold and Rent laws".

 

As a hand rule count a lease for 30 years only. If you compare to rent, you might have paid more during the same period for renting a similar property than when leasing land for 30 years and building a home, which you use for 30 years; or buy a home including a land lease.

 

You might however be able to negotiate a new lease at a fair fee.

 

If you have a separate agreement for a 30 years lease some time out in the future, 30 years from now, it might not be legally binding at all, if being considered part of the original lease agreement; and it might not be binding for a new owner of a land holding company. It might be a civil court case against the one that originally signed the agreement.

 

There is the old saying "never invest more in Thailand than you can afford to loose". It's always worth having that in mind. A usufruct run for an agreed period, or your life. Another option is a superficies combined with a lease, however lease will have same legal limitations as above, apart from being with a girlfriend/spouse.

 

Always make contracts with a spouse before marriage, as contracts made during a marriage has a risk of being declared void in case of divorce.

 

I personally prefers – looked from a worst case scenario – to be worth more alive than dead in Thailand, just in case of something you never know, nor would think ever possible...:whistling:

 

The company option with an empty shell company with Thai nominee shareholders is illegal, however often used one-or-other way. In theory you can never own more than 49 percent of the company, but might be able to control a majority of votes, by using a method with preferred shares.

 

The running costs of an empty shell company could be up to 40,000 baht a year; i.e. in 30-years up to 1,2 million baht (+ inflation).

 

The benefit using a company – apart from re-negotiation of a lease with third party, or the risk of a spouse as owner – is that if reselling the property to a foreigner, you sell the stocks in the company, and is not transferring the property; so no property tax and transfer fees are involved.

 

However, if reselling the property to a Thai, they might not at all be interested in a company, so the company will sell the property, pay taxes, and you will need to close the company.

 

Money is of course relative, but a 6.5 million baht house compared to summed company costs might not make sense, compared to the risk with a 30-year lease agreement, or an agreement with girlfriend/spouse.

 

40,000 baht monthly rent x 12 x 30 = 14.4 million baht, so compared to renting, any long-term "owner" kind of solution makes sense.

 

If you after all considers the company limited method, you might have additional questions.

🙂

 

 

My recommendation is freedom and simplicity.  Renting provides flexibility to move and less upfront cost.  Rent what you want.

 

Unfortunately, I implemented many of your concepts(purchase property in thai lady name, 30 year lease, company) into action and regretted it almost instantly.  I learned the hard way.  Life experience.

 

Do not buy.  Do not put a property in another person's name. Do not form a company. Do not trust lawyers.  You are a foreigner in a foreign country with limited rights.

 

I have bought property in a Thai ladies name and it became a nightmare.  She advised lawyer, behind my back to protect her rights, not mine. She became a witch overnight trying to ditch me.

 

Do not form a company or do 30 years leases.  Its a hassle and lease becomes hard to sell.

 

The benefits of renting are many. Any maintenance issues, special assessments, nuisance neighbors can be avoided.

 

Many foreigner property owners can't even return to Thailand now.

 

Realize any "investment" in Thailand will be a goose egg eventually.

 

 

 

 

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Just rent, and invest the money into something else (if you want to invest in real estate you could buy a Condo in Thailand, or something in your home country, which you can legally own)

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On 8/12/2020 at 12:37 AM, FritsSikkink said:

Project cost is a part of your rent? What a laugh.

You are probably unaware seeing your reaction, there is a 4 baht per square meter charge for common ground security and so on. In this project, it differs per development . Don't ridicule unless you know

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On 8/12/2020 at 8:41 PM, Mark Nothing said:

My recommendation is freedom and 

Do not form a company or do 30 years leases.  Its a hassle and lease becomes hard to sell.

 

Thanks, the 30 year lease seemed ok till I found out that you need the signature of the other party as well to sell. So indeed basically after paying 6.5 million you own nothing or are at least very very dependant on the trustworthiness of the company you lease from

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22 hours ago, WhatsNext said:

You are probably unaware seeing your reaction, there is a 4 baht per square meter charge for common ground security and so on. In this project, it differs per development . Don't ridicule unless you know

That aren't project costs. You don't know what a project is.

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I have been last week in HuaHin for a weeks holiday. Lots of houses for sale. The owner of a development told me, that most of his buyers are Chinese and Europeans. They are not more setting up companies but going the land/lease route.

 

He wanted to make me believe that it's straight 90 years. lol

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15 hours ago, FritsSikkink said:

That aren't project costs. You don't know what a project is.

Ok I don't know I see.

What I do know is that if you want to add to a discussion you provide information or you try to understand what someone means. But it seems you don't understand that part.

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Our house is in our sons and my wifes name , if you dont trust your wife ,why would you marry her? as for putting it in a girlfriends name ,well thats a different matter ,ive only had a few wives ,but dozens of girlfriends😀 none of my wives in the UK ripped me off either.

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True about the trust, I do trust her but I don't think I trust her entire family.

 

Thanks sofar for all the replies, it makes me think more and more about just paying the rent and forgetting about "owning" anything apart from the car

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By the way, i probably worded it wrong : Never was planning to put any real estate in a company, what i mean with "leasing from a company" is factually that, leasing from one of the project builders. Most have two companies now, one that builds the project and one that holds the land for a lease from a foreigner.

 

The other option would be to lease the land from a Thai National, in this case my long time girlfriend.

 

But... Even though renting is substantially more expensive at the moment, even when i would invest the 6.5/8mb in some mutual fund and use the proceeds to rent, it's probably better for the stress level just to do so.

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